What’s Old is New Again – Building Better Regions Fund
How will the new Building Better Regions Fund (really an updated National Stronger Regions Fund) contribute to an improved regional development policy?
The establishment of the Building Better Regions Fund (BBRF) is an opportunity to take another step forward in the Commonwealth’s investment in one-off regional development projects.
Along with the new name, major cities have now been excluded from eligibility. This makes sense given the Coalition has a strong cities agenda.
The challenge noted in the announcement for smaller communities is developing funding propositions that can compete against projects from large councils – where an investment of tens of thousands in proposal development is not uncommon. The decision to exclude major cities and to ensure the assessment process considers similar sized proposals won’t fully resolve this issue, but it will help.
Finally, the announcement indicates the Fund will be split. The majority will remain focused on infrastructure, but some will be diverted to a community stream where matching investment is not required. How this is implemented will be interesting and it could be another step towards broadening the policy approach away from the concrete fever that has gripped regional development for so long.
In the spirit of continuous improvement, the RAI proposes a further change that, if adopted, could make the BBRF a great step forward.
An ‘off budget’ funding structure, supported by a ‘pipeline’ decision making process for project development, assessment, approval and staged delivery of funding (instead of the same old appropriation and rigid, time bound funding rounds) would be a real improvement.
Just as the Regional Investment Corporation has been created to manage drought payments and concessional loans in the Agriculture Portfolio, regional development funds would benefit from an independent, long term structure to ensure we invest effort and funds properly over time.
This structure is needed because traditional grant funding rounds are not an ideal fit for diverse regional investments, where areas have varying capacity to develop strong propositions for investment.
Funding rounds result in rushed proposals, a lot of wasted effort by those who don’t succeed and it is impossible to be confident that the mix of investments the program makes represents the best available use of the funds.
A better approach for the BBRF would be to develop a pipeline model and create an off-budget fund to hold the money until good quality investments can be identified. Rather than funding the best bets from whatever makes the deadline, the Commonwealth could set some clear standards and commit to fund projects that best met (or exceeded) them over time.
If there are a lot of worthy investments in regions then funds may be spent quickly, and a case presented for further allocations. If regional projects can’t demonstrate potential, funds would flow more slowly. Either way, the focus is on quality and building the case for regional development as a legitimate and respected investment of Federal funds in the economy.
This same structure could also be used to manage the funding for Regional Jobs and Growth Packages and City Deals. Again, this will enable a focus on getting the projects right and reduce the pressure to shovel funds out the door as per the timelines.
The Regional Growth Fund structure in Victoria is a good reference point for this approach. It’s not perfect but it’s the most innovative and long-standing approach of the many versions at the State and Federal level in Australia.
Creating a long term fund will be firmly resisted by some players in Canberra, particularly the Department of Finance who like to keep everything nice and neat administratively. However, if we put aside the focus on administrative issues and prioritise better outcomes from this on-going area of Commonwealth investment, it could be the most important change to make.